Nestle Malaysia to sell business to finance world’s largest Milo plant

Nestle (Malaysia) Bhd is selling its chilled dairy business – which retails the Bliss brand of yogurt drinks, in Malaysia, Singapore and Brunei – and its Petaling Jaya factory, to Lactalis Manufacturing Malaysia Sdn Bhd for RM155.3 million, as part of plans to set up the largest Milo factory in the world in Chembong, Negri Sembilan.

The group said it would be using RM100 million, or the bulk of the proceeds from the sale, by end of 2019, for the Milo manufacturing centre of excellence in Chembong.

Nestle Malaysia plans to move all existing Milo manufacturing assets in the Petaling Jaya factory to the Chembong factory.

The disposal is on a going-concern basis, with Lactalis offering continuous employment to a majority of the affected employees based on the purchasers’ evaluation of their business and operational requirements. For roles that will no longer be available, termination benefits will be accorded to those who qualify.

The group expects a one-time gain of RM27 million from the disposal, split over 2018 and 2019.

The deal comes with a “no compete” clause for five years, from Jan 1, 2019, forbidding Nestle Malaysia from going into the chilled dairy business.